The Federal Deposit Insurance Corp. will release figures this week detailing first-quarter deposit defections from the beleaguered Savings Association Insurance Fund.
The news, expected Thursday, will build on data released in March that showed deposits held by thrifts declined $9.1 billion in the fourth quarter.
FDIC Chairman Ricki Helfer has been warning for months that unless Congress enacts a rescue for the savings association fund, thrifts will shed deposits to avoid paying high premiums.
With prospects for legislation bleak, more thrifts are threatening to act. In fact, 300 thrift executives are gathering at seminars around the country, including one here today, to learn about moving deposits out of the savings association fund.
As the fund loses deposits, its income shrinks. Eventually, its revenues will not be large enough to make the interest payments on Financing Corp. bonds. These bonds, floated in the late 1980s to finance the first industry bailout, are paid off with deposit insurance premiums. Ms. Helfer has said default on the Fico bonds could come as early as next year.
But some observers, including most bankers, think the FDIC is exaggerating the problem in hopes of scaring lawmakers into passing the rescue legislation. That bill would require banks to pay 75% of the Fico interest tab every year.
"My gut is the deposit migration in the first quarter was not that bad," said Bert Ely, president of Ely & Associates, Alexandria, Va. "Deposit migration is a hard strategy to execute quickly."
Thrift executives admit as much. Only Golden West Financial Corp., Oakland, Calif., has had substantial success shifting deposits from a SAIF- insured thrift to an institution backed by the Bank Insurance Fund. (The bank fund stopped charging premiums on Jan. 1).
By yearend, Golden West had moved $2.6 billion from its California thrift, World Savings and Loan Association, to its New Jersey bank, World Savings Bank. Higher rates coaxed the thrift's depositors to move at least another $1 billion to the bank during the first quarter, according to sources.
Brian P. Smith, director of policy at America's Community Bankers, said large institutions will lead the way out of the thrift fund. "It's doable, but it's not going to be easy," he said. "And it's not going to be cheap."
